Digital goods tax in New York State

[nicdwilson]

Description

In 7636606-zd-a8c we have a merchant stating that digital goods taxes should be applied in New York at shop base address. The plugin, on the other hand, applies taxes at billing address.

During the course of our investigations, we also discovered that New York specifically exempts digital goods, according to Tax Jar documentation found here

We replicated that virtual products are in fact returning a tax rate for a New York state nexus when a digital product is in the cart.

Opening this issue for further investigation and checking of correct procedures with Tax Jar as per p1707468261410469-slack-C7U3Y3VMY.

[iyut]

Hi, I did some digging about NY tax on digital products :

• https://www.salestaxhandbook.com/new-york/sales-tax-taxability#taxability
• https://modventuresllc.com/do-you-need-to-charge-sales-tax-on-digital-products/
• https://www.tax.ny.gov/bus/st/exemption-enews-periodicals.htm
• https://www.taxjar.com/blog/sales-tax-digital-products

Most of them says that the digital product are not subject to sales tax in New York.

I also confirm that I can replicate this issue as well. It's due to the TaxJar doesnt know the product type from the API request. Whether it's digital product or physical product.

Fortunately, we can apply product_tax_code in the API request so TaxJar knows the product type that we send to their API. And it's already built-in on the plugin.

To add product_tax_code in the request, We will need to create a new tax class with 5 digits product tax code as a suffix from WooCommerce settings and apply those tax class into the digital product. Once the tax class is implemented, the digital product will be tax exempted in NY.

[paulostp]

Hey @iyut 👋 It sounds like there are no changes required to the plugin and that we would just need to document this workaround. Is my interpretation correct?

[iyut]

Hi @paulostp , That's what I think as well. It would be good if we have this stated in the documentation.